U of I Flash Index continued to climb in June

July 1, 2021

U of I Flash Index continued to climb in June

Authors

The June University of Illinois Flash Index continued its climb with an increase to 106.0 from its 105.3 level in May, remaining well above the 100-level that divides growth and decline

Recovery from the COVID-19 pandemic maintained a pace few would have dreamed of a year ago at the end of fiscal year 2020.

State revenues for FY2021 from the three major tax sources (the individual income, corporate, and sales taxes) rose significantly over FY2020 after adjusting for inflation. These revenues were up more than 10% over FY2019 — the last year unaffected by the COVID-19 crisis. In addition, the state received significant transfers from the federal government.  

“The state ended the fiscal year in the best shape in several years, with its bond rating actually rising,” said University of Illinois economist J. Fred Giertz, who compiles the monthly index for the Institute of Government and Public Affairs. “This comes even after the failure of the proposed state constitutional amendment to allow graduated income tax rates, which was expected to generate substantial new revenue.”

However, Giertz cautioned that Illinois’ fiscal struggles are likely not over yet. “Unfortunately, the underlying fiscal challenges remain and will be accentuated when federal aid related to the COVID-19 pandemic is reduced,” He said. 

Despite the strong recovery, the Illinois unemployment rate remained at 7.1%, more than one percentage point above the national level. The rate should continue to fall with the reduction of federal stimulus payments that have slowed the movement back to work along with the strong pent-up demand from depressed consumption during the crisis. 

The Flash Index is normally a weighted average of Illinois growth rates in corporate earnings, consumer spending and personal income as estimated from receipts for corporate income, individual income, and retail sales taxes. These are adjusted for inflation before growth rates are calculated. The growth rate for each component is then calculated for the 12-month period using data through June 30, 2021. See the Full Flash Archive

Even though more than a year has passed since the beginning of the COVID-19 crisis, ad hoc adjustments will still be needed for some time because of the timing of the tax receipts resulting from state and Federal changes in payment dates both this and last year. 

 

 


Research Area: Fiscal and Economic Policy

Policy Initiative: none

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